Dutch to introduce corporate CO2 tax as climate plans fall short

THE HAGUE (Reuters) - The Dutch government announced on Wednesday a carbon tax for companies after a top advisory body said current plans to cut emissions will fall short of targets.

FILE PHOTO: People take part in a protest calling for urgent measures to combat climate change during a demonstration in central Amsterdam, Netherlands March 10, 2019. REUTERS/Eva Plevier

Proposals to fight climate change put forward in recent months will cost the Netherlands around 5.2 billion euros ($6 billion) over the next decade, but will fall short in achieving a 49 percent CO2 emission reduction goal by 2030, the CPB advisory body said.

The Netherlands is one of the most polluting countries in Europe, with higher CO2 emissions per capita and a lower use of sustainable energy than almost everywhere in the European Union.

The Dutch government is expected to decide by the end of April on a climate change policy program after a consultation led to a series of measures proposed by businesses, activists and other groups.

Prime Minister Mark Rutte said these plans will include a tax on CO2 emissions for corporations, on top of the European Union’s current Emissions Trading System, to stimulate more efficient technologies and to make sure companies pay a fair share of the costs of the energy transition.

“This tax needs to be reasonable,” Rutte said without going into details. “It needs to deliver significant CO2 reductions, without chasing companies away.”

It became clear earlier on Wednesday that more far reaching plans were needed after the CPB said the measures on the table were expected to reduce gross domestic product by around 0.5 percent by 2030, but would most likely not enable the government to meet its target of reducing CO2 emissions by 49 percent in 2030 from 1990 levels.

Dutch CO2 emissions are expected to be 21 percent lower than in 1990 next year, missing the goal of a 25 percent reduction which was ordered by a Dutch court last year.

“These policies could significantly stimulate the energy transition, but a lot still needs to be done”, CPB said of the around 130 measures which were put forward.

These include higher taxes on the use of gas for heating and on airline tickets, subsidies on electrical cars, increased use of wind and solar power, and incentives for industry to cut emissions and homeowners to better insulate their houses.

Of the total cost, around 3.2 billion euros would have to be paid by households, CPB said.